Leaving the Land of the Giants

While it's not wise to bet against a company
as successful as Apple has become, it is wise to expect failure from a
company whose success is rightly attributed to a dead and irreplaceable
CEO. Although it was business as usual for a while after
Steve Jobs perished in September 2011, it was clear a year later that
the wheels were coming off. First there was the Maps app debacle, in
which Apple replaced its Google-based Maps app on iOS 6 with one based
on a stew of inadequate substitutes—and then failed to improve it
for months while Google took its sweet time not producing its own Maps
app for the operating system. This not only hurt Apple and iOS 6, but
also the new iPhone 5, which featured the Maps value-subtract and was
itself an unspectacular successor to the iPhone 4s—which wasn't
all that big an improvement on the iPhone 4, which came out way back in
2010. Meanwhile, for all of Apple's continued success with the iPhone,
its entire iOS smart-thing hardware market contains just three devices
(iPhone, iPad and iPad Mini) made by only one company. Meanwhile, Android
remains an open platform with countless hardware implementations from many
companies. As I write this, the new Consumer Reports
rates various Samsung Galaxy devices ahead of the iPhone, which had
formerly topped the magazine's ratings. Countless new Android phones
also will hit the market before the iPhone 6.

Credit where due: Apple has been brilliant at retailing and customer
support. On the latter count, nobody else is even close. Also, Apple is
advantaged by a competitor—Microsoft—that seems hell-bent
on sending customers anywhere else.

At this point, it's not clear where Apple is headed. The company's
only "wow" product since Steve died was the iPad Mini,
which should have come out years earlier. In the past, it was easy to
assume that Apple had a "next big thing" up its sleeve. Now
it's not.

On to Google.

Last October, Google took the wraps off the biggest thing
it has in the physical world: giant data centers, which it
immodestly calls "Where the Internet lives" (http://www.google.com/about/datacenters/gallery/#/). The photos
doing the bragging are as artful as can be, considering that the subjects
look like power plants: vast and stark white buildings, with glowing
racks inside and huge cooling gear outside, veined by an abundance of
plumbing. It makes one pause to consider how dependent we have become on
giant companies and their very earth-bound "clouds".

I'm just worried about the way Google makes money. Nearly all of it comes
from advertising. That's what pays for all the infrastructure Google
is giving to the rest of us. As our dependency on Google verges on the
absolute, this should be a concern. Think of advertising as oil and
Google as one big emirate. What happens when the oil runs out?...The free
rides won't go on forever. There are better ways than advertising for
demand and supply to find each other...and more will be found. Google
will be in the middle of that discovery process, no doubt. But it's
an open question whether Google will make the same kind of money in a
post-advertising marketplace. I'm betting it won't.

Since then, Google has continued growing at a 20+% annual rate, and
diversifying a bit (for example, by acquiring Motorola Mobility). But
the vulnerabilities are still there: for Google and therefore also for
the rest of us. Also, the Internet that "lives" in Google's
data centers has become an overwhelmingly commercial one, especially
on the Web. The percentage of information on the Web that isn't about
selling something continues downward as more and more eyeball-routers
get into the ad-based game—and game that game as well. How far can
this go before the whole ad-funded system, with Google at its center,
begins to fail in big and obvious ways? No way to tell, but the system
we have now can't go on forever. Trees do not grow to the sky.

Next, Facebook.

An alpha geek told me recently that the most remarkable thing about
Facebook is the sturdiness of its infrastructure: it rarely if ever goes
down. Compare that to Twitter, a much smaller service notorious for its
familiar "fail whale". Facebook's infrastructure should be
good for many things other than housing a locked-in "social"
space where inhabitants get advertised at. What if Facebook started
offering paid services to its users, turning them into actual
customers? For example, it could work as a fourth-party agency (http://blogs.law.harvard.edu/vrm/2009/04/12/vrm-and-the-four-party-system),
helping customers actually find
products and services, rather than merely searching for them,
as they do with Google. Facebook could host personal clouds (http://www.windley.com/archives/2012/11/the_cloud_needs_an_operating_system.shtml)
of data kept private for paying customers, selectively disclosing required
data to potential sellers (or government agencies, or nonprofits)
on a secure need-to-know basis—treating personal data the way
a bank (as a fourth party) treats customers' money. Prototype work
on this kind of thing has already taken place at Innotribe (http://innotribe.com), the innovation arm of SWIFT (http://www.swift.com), the banking nonprofit that moves $trillions
around the world every day. I know, because I've been involved in it. But
Facebook won't go there because Facebook, like Google, sees its main
business as advertising and would rather do business with businesses
than with individuals. Also, like Google, it would rather sell its users
to advertisers than serve as an intermediary in the far larger retail
and services marketplace.

One reason Facebook won't make that move was suggested to me by a top
executive at an advertising company a couple years ago. He told me the
blinders both Facebook and Google wore were the ones that keep them
focused mostly on each other. While this isn't a verbatim quote, it's
close enough: "Google envies Facebook's ability to get personal
with users, while Facebook envies Google's ability to put ads everywhere
on the Web." Thus, we have locked tentacles rather than evolution
by either squid.

Comments

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One can only wish the author will be proved right in his conclusion, but I am afraid the future will be much darker. At least where I live, being hooked up to 'the net' is already practically mandatory. We may very soon become literal serfs under constant and total surveillance and control. There is probably no escape possible - not even through legislation.

The pattern of the struggle was set at the birth of computing: Will we use the power of computing to replace the human experience --Artificial Intelligence-- or to personalize and *augment* the human experience? AI is the corporate squid model. Augmentation is the personal model.

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